Financial Accounting Analysis of Pearson Group Case Study

Financial Accounting Analysis of Pearson Group - Case Study Example The Company operates a variety of pension plans, the largest being the UK Group plan which includes both defined benefit plans and defined contribution plans. It also operates a few smaller defined benefit plans in the U.S [(401 [K)] and Canada. Defined contribution pension plans and post-retirement medical benefit plans (PRMB) are principally for employees located in the U.S. The plan assets for the UK Group plan are held by a trust independently of the Company and hence are accounted for at their net value in the balance sheet as per IAS 19 (European Financial Reporting Advisory Group, 2008). Based on the discount rate of 5.80% (FY06: 5.20%), present value of this obligation was 1,682m (FY06: 1,683m) and the fair value of plan assets were 1,744m (FY06: 1,528). The net value of 62m was carried to the balance sheet as Retirement Benefit Asset. Deficit in FY06 amounting to 155m was reported under non-current liability as Retirement Benefit Obligations. In FY07, the Company contributed 121m (including a special contribution of 100m) to fund this shortfall and disclosed it as a reduction from cash flow from operations. The Management expects to eliminate this shortfall by FY14 and has agreed to further contribute 21m in FY08 and 21.9m per annum thereafter in excess of an estimated 30m of regular contributions. Any further deficit in funding can add significa nt burden on the Company's cash flows from operations. As per IAS 19, service cost of 29m (FY06: 27m) for UK Group plan was charged to income statement as an operating expense. Excess of expected returns on these plan assets over the interest paid on plan liabilities amounting to 12m was reported as finance income. While the expected return was 96m (FY06: 85m), the interest paid was 84m (FY06:78m). The rate used for discounting these plan assets is based on the annualized yield on the iBoxx over 15-year AA-rated corporate bond index. As required by IFRS, the Company has disclosed the details of retirement benefits arrangement for its directors and the assumptions used for estimating the present value of benefit obligations. The expected sensitivity of present value of obligations to changes in discount rate and the changes in the value of plan assets and liabilities are also disclosed under notes to consolidated financial statement. The Company has also reported Retirement Benefit Obligations amounting to 95m (FY06: 95m) under non-current liabilities as their present value of obligations were exceeded the fair value of their plan assets. These liabilities relate to other defined benefit obligation pension plans, US PRMS and other pension accruals. Service costs of these plans amounting to 3m were charged as an operating expense; whereas and the interest on the PRMS liabilities of 2m was recognized as finance expense in income statement. PRMS are unfunded but are accounted for and valued similarly to defined benefit pension plans. The total actuarial gains on defined pension benefit plans and post retirement plans amounting to 80m (FY06: 107m) was directly charged to equity and reported under Statement of Recognized Income and Expense (SORIE). Discount rate for all the U.S plans are based on a U.S bond portfolio matching model, which

CONSULTANCY PROJECT REPORT Essay Example | Topics and Well Written Essays - 3750 words

CONSULTANCY PROJECT REPORT - Essay Example As a result of that most of the companies are continually focusing on the single projects to the detriment of the project portfolio as a whole (PMI, 2013). It is indispensable for the companies to identify the loopholes in their system so as to ensure their goals and objectives get successfully fulfilled. Assessing the current practices of organizations and comparing it with the industry recognized best practices will strongly assist them in discovering the gaps. In the similar manner, the loopholes of a company in its project management area can be identified by comparing it with the industry recognized best practise project management. The role of a consultant in such scenarios becomes highly visible. In this context, a consultant or a subject matter expert plays a crucial role in identifying those gaps and focuses on the opportunities that drives improvements and augments the business performance of the client organization (Kennedy, 2007). Hence, from the discussion it is evident that the role of a consultant is to identify the problems and make suitable recommendations to get rid of those problems (Biech, 2008). Although, from a broader aspect the process may look simple and uncomplicated but in reality the consultancy process involves several complicated tasks. The theory of consultancy foster organizations to explore alternatives those are unknown to the company itself and ultimately help them to choose the most viable and promising option from the lot. In addition, consultants also play a critical role in the implementation process of the alternative course of action. This report gives insights into how a consultancy project should be undertaken and how it would add value to the client organization. In doing so, suitable examples pertaining to the subject of concern well be provided. Discussion How to Undertake a Consultancy Project It is essential for the organizations to know the fact that a consultant would not make decisions for the companies, purcha se specific products and provide standard services. Consultant’s just acts as a support for organizations to solve a problem rose due to specific reasons or recommends companies on how to improve their performance levels. In other words, a management or a strategic consultant is responsible for assisting organizations to enhance their performance levels, through the evaluation and analysis of the active organizational issues, and simultaneously develop plans for improvement. An organization may draw up the services of consultant on a number of grounds, encompassing gaining external piece of advice and admittance to the consultants' specific know-how. A company faces different type of challenges which may take place due to the internal or external business environment. For example, an internal issue for a company can be defaulting HRM systems, failed car park pricing strategy, and failed staff retention strategies, unfeasible new cafe bar, failed strategy of launching of fully serviced apartment building and failed perception assessment of the staff members. In the similar way there can be external problems as well for the company. Some of the issues in this context can be integrating quality, environment and health management systems, marketing plan for a new hotel, and competitor and market analysis for a firm of accountants, health issues awareness campaign, finding sponsors for an event, plans for setting up a charity and developing an environmental management strategy